Senators Criticize Executive Over Lobbying on Satellites

By ERIC SCHMITT

Published: July 30, 1998

WASHINGTON, July 29—
A current and a former top executive of the nation's largest satellite maker urged a Senate panel today not to subject the industry to a more restrictive licensing review by the Government.

But senators accused one executive, C. Michael Armstrong, former chairman of the Hughes Electronics Corporation, of lobbying President Clinton too aggressively, and of acting as an unofficial envoy between the United States and China to lift sanctions that blocked Hughes from launching two satellites aboard Chinese rockets.

Congress is weighing whether to revert the licensing control over satellites to the State Department, which had that responsibility until 1996, from the less restrictive Commerce Department. Lawmakers fear that engineers from Hughes, which is a unit of the General Motors Corporation, and from Loral Space and Communications gave Chinese officials sensitive information after a failed launching of a Loral satellite on a Chinese rocket in 1996.

Mr. Armstrong, who became the chairman of AT&T last fall after running Hughes for five years, and Steven D. Dorfman, Hughes's vice chairman, told senators that they did support giving the State Department the authority to approve any technical exchanges in a disaster review.

But the executives said transferring licensing authority to the State Department would hurt American companies.

Much of today's hearing focused on Mr. Armstrong, 59, who has headed Mr. Clinton's advisory panel on exports since it was created three years ago.

In August 1993, when the Administration imposed sanctions on China for shipping missile technology to Pakistan, Mr. Armstrong thrust himself into the dispute, which grounded two Hughes satellites, and threatened company profits and thousands of jobs in Southern California.

Documents released by the committee today, and by the White House in the last two weeks, showed how Mr. Armstrong worked to free his satellites from the sanctions and, two years later, how he pushed the White House to shift the licensing jurisdiction to the Commerce Department.

In a letter on Oct. 29, 1993, Mr. Armstrong reminded Mr. Clinton that he had supported the President's economic package and the North American Free Trade Agreement. ''I am respectfully requesting your involvement to resolve the China sanctions,'' Mr. Armstrong said.

A Dec. 8, 1993, internal White House memorandum to Mr. Clinton's national security adviser, Anthony Lake, said, ''Armstrong is now fairly directly threatening to wage a more public campaign against the Administration's sanction.'' Mr. Armstrong, the memorandum said, was threatening to ''write op-eds and/or spur union opposition.''

Mr. Armstrong said today that he had never compromised national security. But senators voiced concern that Mr. Armstrong's blunt approach pushed the limits of corporate advocacy.

''At a bare minimum, you need some help in letter-writing,'' Senator Pete V. Domenici, Republican of New Mexico, told Mr. Armstrong. ''That's not any way to write the President.''

In seeking to have the sanctions lifted, Mr. Armstrong mixed diplomacy with business by passing messages between senior Chinese and American officials like Samuel R. Berger, Mr. Clinton's deputy national security adviser.

By early 1994, President Clinton reached a compromise that allowed Hughes to modify its satellites and refile its applications with Commerce. The Administration ended the sanctions in November 1994.

Mr. Armstrong was still waging a war to shift licensing authority over all commercial satellites to the less restrictive Commerce Department.

By March 1996, Mr. Armstrong enlisted Mr. Berger's help in reversing the State Department objections. ''It was indeed some battle, two and a half years and more politics than a textbook,'' he told Mr. Berger in Oct. 17, 1996 ''thank you'' note.